X11 Cryptocurrency - The Facts

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Instead, they went with Solution 2. The resulting currency, called bitcoin money, increased the blocksize to 8 Mb in order to accelerate the verification procedure to permit a performance of around two million transactions every day. In the time of writing, Bitcoin Cash is valued at $545.00 to Bitcoins $6,328.11.

When you hear about bitcoin mining, you envisage coins being dug out of the ground. But bitcoin isnt physical, so why do we call it mining

Since its like gold mining in that the bitcoins exist in the protocols design (just as the gold exists underground), but they havent been introduced into the light yet (like the gold hasnt been dug up). The bitcoin protocol stipulates that 21 million bitcoins will exist at some point.

They get to do so as a reward for creating blocks of validated transactions and including them in the blockchain.

Backtracking a little, lets talk about nodes. A node is a powerful computer which runs the bitcoin software and assists to keep bitcoin running by participating in the relay of information. Anyone can run a node, you just download the bitcoin software (free) and also leave a certain port open (the drawback is that it consumes energy and storage space the network at time of writing carries up about 145GB).

One node will send information to some nodes which it knows, who will relay the information to nodes they know, etc.. This way it ends up getting around the whole network fairly fast. .

Some nodes are mining nodes (usually referred to as miners). These set outstanding transactions into blocks and add them into the blockchain. How can they do so by solving a complex mathematical mystery that's a portion of the bitcoin program, and including the answer in the cube. The puzzle that needs solving is to find a number that, when combined with all the information in the cube and passed via a hash function, produces a result that's within a certain range.

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(For trivia lovers, this number is called a nonce, which is a concatenation of number used once. In the case of bitcoin, the nonce is an integer between 0 and 4,294,967,296.)

How do they find this number By guessing at random. The hash function makes it impossible to forecast what the output will be. So, miners guess the mystery number and apply the hash function to the combination of the guessed number and also the information in the cube. The resulting hash must start with a pre-established number of zeroes.

Whats more, there may be several nonces that make the intended result, or there might be none (in the event the miners keep trying, but with a different block configuration). .

The first miner to acquire a resulting hash within the desirable range announces its success to the remainder of the network. The rest of the miners immediately cease work on that block and start trying to figure out the puzzle number for your next one. As a reward for its work, the victorious miner has some new bitcoin. .

In the time of writing, the reward is 12.5 bitcoins, which in time of writing will be worth almost $200,000.

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Although its not nearly as cushy a bargain as it sounds. There are a lot of mining nodes competing for that reward, and it is a question of luck and computing power (the further guessing calculations you can execute, the luckier you're ).

Also, the costs of being a mining node are considerable, not only due to the powerful hardware needed (in case you've got a faster processor than your competitors, you've got a better chance of finding the right number before they perform ), but also due to the large amounts of electricity that running these processors consumes. .

And, the number of all bitcoins continue reading this awarded as a reward for solving the puzzle will decrease. Its 12.5 now, however, it pits each four decades or so (the next one is anticipated in 2020-21). The value of bitcoin relative to cost of electricity and hardware could extend up over the next few decades to partially compensate this reduction, but its not certain. .

The difficulty of this calculation (the necessary number of zeroes at the beginning of the hash string) is adjusted frequently, so it takes on average about 10 minutes to process a block.

Why 10 minutes That is the amount of time that the bitcoin programmers think is necessary to get a steady and diminishing flow of new coins until the highest number of 21 million has been attained (expected some time in 2140).

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